For the Holidays, my parents came to visit. They are both in their early 80′s and are of generally good health. I consider them to be middle class people who have always worked hard to support and provide for their Family. We spent some time discussing their current standard of living and their finances. During the discussion, I asked if they would share with me their monthly expenses so I could write about it for my work. They were happy to come up with the number. In fact, they did it in about 10 minutes.

After some back and forth discussion about different bills, their total cost on their monthly fixed expenses are about $1,500. This includes all of their bills and insurances and property taxes. And it includes cable TV and mobile phone service as well. Of course, they have some discretionary spending not included in that number. Food, travel, other household purchases, and well, whatever else comes up. (They are fortunate to receive health care coverage through the Veterans Administration – my Father served in the military in both Korea and Vietnam with more than 20 years of service.)

Using some conservative estimates (and I think these are really, really, really conservative), I add in another $25,000 in annual expenses. This brings their total to $43,500. How similar is this to other people? In my experience with other people like my parents I would say it is very similar. My parents have the benefit of having their health care fully paid, but other than that I see their expenses as being quite in line with most of the middle class retirees I counsel.

Their main goals at this point are to continue to live independently and enjoy and support (when necessary) their Family. By and large, that’s it. They have a large Family with four children and many grandchildren and great-grandchildren. They agree that they do not have nearly the same consumption, or close to it, as when they were raising their Family and in early retirement. They are now enjoying their days with their Family in a much slower pace.

My point in this exercise with my parents was to validate my view of how people live in their mature years. If you listen to many financial services firms or retirement commentators, you hear of an impending retirement disaster. However, this is built upon the expectation that retirees have growing annual expenses in their retirement years. It is assumed that people have the same “standard of living” for the remainder of their life and, with inflation, their costs go up every year. Sure, that might be the case in their first few years of retirement, but I have never observed that. Over time, as people slow down, their expenses settle down.

Of course, we are all different and have unique goals and motivations. And any retiree faced with a significant long term care event can see their financial world turned upside down. This is a risk that cannot be denied. But many people will be able to get by, and enjoy their life as it is, simply because their lifestyle moderates over the years. If you want to know how much you need, you need to know how much you will spend. And looking to how other retirees are doing and how they get by can be a great place to start!